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NEW CANAAN, Conn. (CBS 2) – A Connecticut couple is due in court Monday to answer charges that they bilked an elderly woman out of a fortune to build an island dream home. Michael Michelson and Paula Halloran were arrested by police at their home in New Canaan after the family of former Greenwich resident Virginia Bantel discovered a years-long pattern of theft while going through the elderly woman’s financial records.

Halloran, 39, is a former investment counselor for Smith Barney at the firm’s office in New Canaan. Her husband, Michael Michelson, 57, is a lieutenant with the Wilton Fire Department who allegedly helped his wife launder stolen funds through a firefighter’s charity.

According to arrest records the thefts took place between 2005 and 2008, with the more than $1.1 million being traced to the couple’s personal expenses – including the construction and furnishing of a large house on Block Island which is now up for sale.

The victim, Virginia Bantel, 81, is the widow of former U.S. Tobacco Chairman Louis Bantel. Sources indicate Halloran met Mrs. Bantel prior to her husband’s death and began to take advantage of her as her health failed. Halloran allegedly convinced the elderly woman to write checks to various accounts Halloran and her husband had control of.

A neighbor of the couple told CBS 2 News that Paula Halloran is 8 months pregnant and currently unemployed. Her former employer says she was fired from Smith Barney is 2008 for “violation of company policies.” Michelson was placed on administrative leave from the Wilton Fire Department the day after his arrest on February 24th.

A spokesman for the New Canaan Police Department called the alleged systematic thefts as “the largest case of fraud in the town’s history.”